Pakistan’s Budget Deficit Narrows to 9-Year Low in FY25

Data from the Ministry of Finance reveals that Pakistan’s budget deficit reached Rs6.17 trillion, equivalent to 5.4% of GDP, during the fiscal year 2024-25. This figure represents the lowest deficit in nine years.

According to the Finance Division’s summary of consolidated federal and provincial fiscal operations for July-June 2024-25, total revenue amounted to Rs17.997 trillion (15.7% of GDP), while total expenditure stood at Rs24.165 trillion (21.1% of GDP). This resulted in a budget deficit of Rs6.168 trillion (5.38% of GDP).

Topline Securities noted that the deficit of 5.38% is an improvement over the government’s revised forecast of 5.6% of GDP for FY25, and aligned with the International Monetary Fund (IMF) projection.

Primary Balance Shows Surplus

The primary balance reflected a surplus of Rs2.719 trillion, which is 2.4% of GDP.

Topline Securities highlighted that Pakistan achieved a primary balance of 2.4% of GDP, marking the highest surplus percentage in over two decades. This accomplishment was attributed to revenue growth outpacing expenditure growth and surpassing both the government’s revised projection of 2.2% of GDP and the IMF forecast of 2.1%.

Figures from the Finance Division indicate that the total revenue of Rs17.997 trillion comprised Rs12.722 trillion in tax revenue and Rs5.274 trillion in non-tax revenue.

The Federal Board of Revenue (FBR)’s tax collection for FY25 totaled Rs11.744 trillion.

Topline pointed out that the FBR tax (inclusive of petroleum development levy [PDL]) to GDP ratio increased to 11.3% in FY25, reaching a seven-year high compared to 9.7% in FY24 and an average of 9.9% over the past five years (FY20 to FY24).

Provincial governments’ tax collection was recorded at Rs978 billion in FY25.

Pakistan’s total GDP for FY25 was Rs114.692 trillion.

Topline Securities anticipates Pakistan will maintain its primary surplus for the third consecutive year in FY26, a feat not seen in two decades, projecting an overall fiscal deficit of 4-4.1% of GDP in FY26, which would be the lowest in two decades.